College Zone - Printable Version - Parent Zone - 8th-12th Grades

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An educational loan is a type of "self-help" aid that lets you or your child borrow money from the government, banks or other lending institutions. Since it’s "self-help" aid, it must be paid back with added interest. There are student loans (which are generally backed by the government and long-term with low interest), parent loans (for you to help pay for college), alternative loans (not backed by the federal government) and consolidation loans (which combine all educational student loans into one, for one easy payment with possible lower interest and a longer repayment term). Loans can be awarded based on financial need (subsidized loans) or not on financial need (Federal PLUS loans and unsubsidized loans). Loan eligibility will be determined after your child’s grants, scholarships and Federal Work-Study program(s) has been considered.

Under the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan Program (Federal Direct Loans), individuals can apply for subsidized and unsubsidized Federal Stafford Loans (for students), Federal PLUS Loans (for parents and graduate and professional students) and Federal Consolidation Loans.

Federal Perkins Loans are also available to students who demonstrate exceptional financial need and are repaid to the school. Alternative loans are used to supplement federal loans and are based on the borrower’s credit history.

Know the borrowing basics for both student and parent loans and be sure to research your loan options carefully. Take note that federal student loans generally have the lowest interest rates and the greatest flexibility. Both you and your child should borrow conservatively, accepting only the amount of money necessary to fund your student’s educational needs.